In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5

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In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million.
a. What are the fixed costs of hamburger production?
b. What are the variable costs?
c. What is the average cost per burger when the firm produces 1 million hamburgers?
d. What is the average cost when the firm produces 2 million hamburgers?
e. Why is the average cost lower when more burgers are produced?
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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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